J.M. Miller

Faculty of Law,
Victoria University of Wellington,
PO Box 600,
Wellington,
New Zealand

Abstract

This paper describes the overall no fault accident compensation
scheme developed in New Zealand, and sets out the current
provisions of the Accident Rehabilitation and Compensation
Insurance Act 1992 for the compensation of mental trauma
injuries. It draws attention to the abolition of lump sum
compensation for injuries, and the exclusion of many mental
trauma injury claims which were available under the previous
Accident Compensation Act 1982 - both of which led to
considerable public dissatisfaction, and brought lawyers back into
the compensation process with damages claims for mental trauma
injuries. The renewed interest of lawyers in litigation also led to an
increase in exemplary/punitive damages claims. These matters are
raised for the information of interested parties overseas as well as
those closer to home in New Zealand.

Compensation for Mental Trauma Injuries in New Zealand

Introduction

Since 1974 New Zealand has had a comprehensive no fault
accident compensation scheme for those who suffer personal
injury. This means that all personal injury victims whether they are
injured on the road, at home, in a hospital, at play, or at work are
covered by the one Act - the Accident Rehabilitation and
Compensation Insurance Act 1992
1. Therefore a person injured in a
motor vehicle accident or at work is compensated in the same way as those
injured at home. 2
To come under the Act the injured person has to show:
a) A personal injury
3and
b) Cover 4 under the Act

If a injured person has cover under the Act then there can be no resort to the
New Zealand Courts for damages for the injury, as s14 of the Act bars
"proceedings for damages arising directly or indirectly out of personal injury
covered by this Act " 5. There is no problem with motor vehicle and work
accidents coming under the definition of the Act, because the vast majority
involve some form of forceful contact resulting in physical injuries 6 caused
by the accident 7

Unlike in some other overseas jurisdictions, there is no need for the injured
person to prove negligence and sue in the courts for damages, nor is there
need for the injured person to show that the injury happened through the use
of a motor vehicle or at work. Instead, an injured person simply comes under
the general accident compensation scheme if they have a personal injury that
has cover.

The NZ legislation therefore does not have either the lengthy and expensive
delays of civil litigation for damages, or the demarcation disputes that concern
other overseas no fault schemes such as those involving motor vehicles 8.

Upsurge in Damages Claims

Although obtaining compensation from the Accident Compensation
Corporation 9 for most injuries poses little difficulty 10, and the bar on
damages claims remains, there has been a spectacular upsurge in damages
claims being filed for mental trauma and exemplary damages in personal
injury cases. The upsuge has been mainly for cases of sexual abuse, medical
negligence, and work related injuries, although there have been some as a
result of motor vehicle accidents 11.

There are three main reasons for this upsurge in damages claims:

Mental trauma is now excluded from the definition of personal injury
under the Act - this means that damages for mental trauma can now be
claimed in Court.

Exemplary damages claims are now allowed in cases of negligent as well as
intentional conduct.

The abolition of lump sum compensation by the Act.

Mental Trauma Claims

Under the previous Accident Compensation Act 1982 the definition of
personal injury by accident included "the physical and mental consequences
of any such injury or of the accident" 12. Suffering mental consequences from
an accident (an unlooked for mishap or untoward event) 13 was therefore
sufficient to come under the Act. Such mental consequences ranged from
transient emotional trauma such as humiliation, through to unresolved grief
reactions and serious psychiatric injury.

Thus in ACC v E 14 an employee who had a nervous breakdown as a result
of being sent on a stressful management course, was held to have suffered
personal injury by accident, and in Cochrane v ACC 15 a mother who suffered mental trauma from watching her son die in hospital after he had been
tortured by a gang, was also held to have suffered personal injury by accident.
However under the 1992 Act such claims are excluded from the scheme
through the definitions of personal injury and mental injury 16.

Definitions

The definition of personal injury is contained in s4 and s8(3) of the 1992 Act,
and unlike the previous definition of personal injury by accident in the 1982
Act, it is a closed definition.

Section 4 states:
"Definition of Personal Injury
(1) For the purposes of this Act 'personal injury' means the death of, or
physical injuries to, a person , and any mental injury suffered by that person
which is an outcome of those physical injuries to that person and has the
extended meaning assigned to it by section 8(3) of this Act..."
Section 8 states:
"Cover for personal injury occurring in New Zealand
(1) This Act shall apply in respect of personal injury occurring in New Zealand
on or after the 1st day of July 1992 in respect of which there is cover under
this Act.
(2) cover under this Act shall extend to personal injury which -
(a) Is caused by an accident to the person concerned; or
(b) Is caused by gradual process , disease or infection arising out of and in the
course of employment as defined in s7 or s11 of this Act; or
(c) Is medical misadventure as defined in section 5 of this Act; or
(d) Is a consequence of treatment for personal injury covered by this Act
(3) Cover under this Act shall also extend to personal injury that is mental or
nervous shock suffered by a person as an outcome of any act of any other
person performed on, with , or in relation to the first person (but not on, with,
or in relation to any other person), being -
(a) An act that is within the description of any offence listed in the First
schedule to this Act." 17

Type of mental trauma included

Therefore only mental trauma which is an outcome of physical injury is
included in the 1992 Act 18. Furthermore only very serious mental trauma is
included, because the phrase "mental injury" is defined in Section 3 as " a clinically significant behavioural, psychological or cognitive dysfunction" 19.

In ACC v E 20 a case decided under the 1982 Act, the Court of Appeal said:

"It would be a strange situation if cover under the Act for a person suffering
serious mental consequences caused by an accident were to depend upon
whether or not some physical injury however slight also is sustained. Further
it would create major difficulties should it be necessary in particular cases to
separate physical and mental injuries."

This "strange situation" is now the law under the 1992 Act.

Type of mental trauma excluded

As recognised under the 1982 Act, mental trauma can range from transient
emotional reactions of embarrassment, anger, humiliation etc. through to more
serious mental trauma such as shock and major psychiatric reactions. But the
1992 Act:

1) no longer recognises transient emotional trauma as a personal injury.
This means that an injured person can now sue for damages for transient
emotional trauma.
2) does recognise mental or nervous shock as a personal injury, but only
as the result of a sex crime 21. Therefore if there is mental or nervous shock
and no sex crime is involved, the injured person can sue for damages.
3) recognises mental injury as an outcome of physical injury as a
personal injury, but the mentally injured person can sue for damages:

a) if the mental injury is not an outcome of the physical injury and
happened prior to the physical injury as in the terror at the approach of a
train while stuck on a level crossing, or
b) if the mental injury happened at the same time as or after the
injury but came from brooding over the horrific sights involved in the accident
and not from the injuries.

Hence the upsurge in damages claims for mental trauma using the torts of
assault,battery and negligence. 22

Assault , Battery and Negligence

Damages claims for assault and some batteries also became possible after the
1992 Act, because mental trauma is not included in the Act, and physical
injury is not defined. Because of the separate definition of "mental injury", the
phrase "physical injury" cannot include any aspect of mental trauma. It must
be assumed that the legislation would not specify a restrictive definition of
mental injury if lesser mental trauma could simply be included under physical
injuries. For this purpose, physical injuries must mean more than mere
physical contact, and perhaps be in line with the Crimes Act 1961 definition
of "to injure" as meaning "to cause actual bodily harm" 23. For example, in R v McArthur 24, Mahon J held that an injury had to be something in the way
of broken bones, bruising, cuts or lacerations after being knocked down by a
car, rather than an injury where the victim was only shaken and dazed.

It could be argued that because of the different policy objectives, a different
interpretation should be given to injury in a criminal statute from that given
in a compensation statute. However, given the restricted nature of the
definition in s4, physical injuries have to be something more than mere hurt
and be in the nature of cuts , wounds, bruises and fractures. Thus, any
contact which did not result in these types of injuries would not be regarded
in law as a physical injury - and his has been confirmed in Bell v ARCIC 25
an Accident Compensation case in the District Court 26, where a cotton bud lodged in a ear was held not to be a personal injury even though medical
attention was required to remove it.

Thus if there is physical contact which is not a physical injury e.g. a
contemptuous touch, this also could be the subject of a damages claim.
If there was no damage suffered, there would certainly be a problem in suing
for negligence - but a claim in assault and battery, where no damage is required, could be an option
particularly if there was a deliberate attempt to strike the victim 27.

No Clear Decision On Mental Trauma

Despite the number of claims filed for damages for mental trauma, a decision
on the matter is still awaited from the Court of Appeal. Most of the claims have
survived strike out applications, and as yet only one mental trauma case has
proceeded to an adverse judgment by a High Court Judge. In that caseKingi
v Partridge 28, a claim for nervous shock by a family over the death of a
relative in hospital was struck out on the basis of the tests for proximity laid
down by the House of Lords in Alcock v Chief Constable of South Yorkshire
29. This Alcock case requires some locational and temporal proximity between
the claimant and the horrifying event, i.e. the claimant must hear or see the
incident which provokes the nervous shock. To be told of the event or to visit
the scene afterwards is not sufficient. However Lord Cooke when he was
President of the Court of Appeal, noted 30that the Alcock decision was really
a policy decision, thus indicating that different tests for nervous shock might
be more appropriate for New Zealand to adopt. Therefore there are some
doubts whether the English tests for nervous shock will be adopted in New
Zealand by the Court of Appeal.

In two recent decisions a Master of the High Court preferred the more liberal
Australian approach to the requirement for proximity in nervous shock cases
to that of the more restrictive English approach 31. For example, in the Australian cases Andrews v Williams 32,Coates vGovernment Assurance Office of NSW 33
and Pham v Lawson 34, the fact that the claimant was not present at the
scene or its immediate aftermath but instead only learned about the incident
afterwards was not fatal to their claim. However Master Venning still
considered that a recognised mental or psychiatric illness was required for a
nervous shock claim to succeed at common law, and that lesser mental
trauma was insufficient. The issue has still to be resolved by the Court of
Appeal in New Zealand, and that Court has already shown a willingness to
award damages for mental distress .

Damages for Distress

In Mouat v Clark Boyce 35 the plaintiff was awarded damages for the
financial loss and distress she suffered through the defendant firm of
solicitors failing to properly advise her when she guaranteed financial
transactions for her son. The defendant solicitors challenged the award of
$25,000 to Mrs Mouat for her distress. They argued that the worry,
inconvenience and stress were not causative of any physical consequences,
and did not amount to nervous shock or neurosis such as to be compensatable
in tort.

The Court of Appeal rejected this argument and upheld the award. Lord Cooke
said :

"In my opinion, when the plaintiff has a cause of action for negligence, damages for distress , vexation, inconvenience and the like are recoverable in
both tort and contract, at least if reasonably foreseeable consequences of the
breach of duty . It has been said that mental distress is not by itself sufficient
damage to ground an action :see McGregor on Damages (15th ed 1987) para
89. But that question does not arise here as the plaintiff has suffered other
recoverable damage."

While the fact that there was other recoverable damage (e.g. financial loss)
meant that Lord Cooke did not have to decide whether mental distress alone
was sufficient, Richardson J considered that it was. He said:

"In the present case where there is a duty of care to the plaintiff, the scope of
the damages recoverable is essentially a question of remoteness of damage
which turns on whether the particular harm was a reasonably foreseeable
consequence of the particular breaches of duty which have been established.
And public policy concerns which emphasise the often temporary and
relatively trivial nature of the harm and the risks of falsification cannot justify
leaving the burden of the loss with the innocent victim where the claim is
adequately proved."

Gault J also considered that there was no reason to interfere with the award
of damages for stress. Thus it would appear that in New Zealand, damages
claims for mental trauma in negligence or assault and battery will not fail
solely on the grounds that there is only transient mental trauma.

Section 14 Bar On Damages

The only remaining argument against such claims succeeding is where the
emotional trauma arises from witnessing or learning about another person
being injured or killed. It will be remembered that s14 of the Act bars damages
claims "arising directly or indirectly out of personal injury covered by this Act".
While it is clear that the person suffering from metal trauma has not suffered
a personal injury covered by the Act, the person whom he has seen injured or
killed certainly has.

The argument can then be made by a defendant that the damages claim for
mental trauma arises directly or indirectly out of the other persons personal
injury and is therefore barred by s14. The particular argument succeeded
recently before a Master of the High Court who struck out the plaintiff's claim.
In that case Palmer v Danes Shotover Rafts Ltd & ors 36the plaintiff suffered nervous shock from seeing his wife killed in a rafting accident. But his claim
for $50000 damages against each defendant was struck out by the Master as
being barred by s14 of the ARCI Act 1992, because he personally had not
suffered physical injuries, although his wife clearly had. However this decision was recently reversed on appeal by Pankhurst J. 37 who said

"It is my view that the natural and ordinary meaning of s14(1) does not extend to the secondary victim of an accident"

The case is now going on appeal to the Court of Appeal for a policy decision, but it is submitted that although a literal
reading of the words in s14 could bar such claims, the Court of Appeal would
be slow to deny access to the courts for those excluded from the Act, the
Court would probably reason as they did for exemplary damages claims i.e.
that the mental trauma arises not from the other persons personal injury or
death but from the defendant's conduct in bringing about such an horrific
event. Any other decision would also lead to the anomalous situation of some
mental trauma claims being barred where the trauma arises from an injury to
another, but allowed either when there has been no such fear, or there has
been such a fear but no injury eventuates as in the old case of Pugh v London
v Brighton and South Coast Railway Co 38where a signalman suffered nervous shock when he thought a train was about to crash. It did not crash
and there were no injuries. Pugh's case was approved by the New Zealand
Court of Appeal in ACC v E 39.

At common law, the essential requirement for a nervous shock claim, is that
the defendant owed a duty of care to the plaintiff who suffered the nervous
shock. That allegation depends on a number of features including proximity
and relationship. The injuries suffered by the victim are only important in
showing that the nervous shock claim is likely to be genuine. As in Pugh's
case it is not essential for anyone to have been injured.

Exemplary/Punitive Damages Claims

The 1972 and the 1982 Accident Compensation Acts contained an equivalent
section to section 14 of the 1992 Act and barred proceedings for damages
which arose directly or indirectly out of personal injury by accident. This statutory language was interpreted in some early cases as not only
excluding proceedings for compensatory damages but also exemplary/ punitive
damages. However although acknowledging that the literal wording of the Act
could be read this way the Court of Appeal in a policy decision in Donselaar
v Donselaar 40 decided otherwise. It held that exemplary /punitive damages
did not arise out of the personal injury but from the conduct of the wrongdoer.
They were not therefore barred by the Act. Thus from an early stage in the ACC scheme, such damages claims could be made whether a person's physical or mental injuries came under the Act or not.

However until recently exemplary/punitive damages claims only arose in cases
of intentional harm. But they were fairly limited because most defendants who
caused harm intentionally were either in prison or impecunious - usually both.
Then following overseas developments 41, counsel in New Zealand started to claim such damages in cases of negligence. The first New Zealand case to award exemplary damages for negligent conduct was McLaren Transport Ltd
v Somerville 42. It was case where a garage employee over-inflated a tractor
tyre so negligently that it exploded, causing injuring the plaintiff serious
physical injuries which came under the definition of personal injury in the Act.
He also had cover as the personal injury was caused by an accident. However
he also sued for exemplary /punitive damages. The lower court awarded
$15,000 exemplary damages for negligent conduct that was upheld in the High
Court by Tipping J.
The test used by Tipping J was a simple one:

"Exemplary damages for negligence causing personal injury may be awarded
if, but only if, the level of negligence is so high that it amounts to an
outrageous and flagrant disregard for the plaintiff's safety, meriting
condemnation and punishment."

The matter did not go on appeal to the Court of Appeal, no doubt because the
amount awarded was so low. However the Court of Appeal in another case
which recently came before it, Ellison v L 43, would not commit itself to a decision that exemplary damages could be awarded for negligence.
In that case Mrs Ellison brought a claim for $250,000 exemplary damages
against her dentist. He had extracted a tooth, but negligently left some
packing in the wound which caused her some problems with infections until
it was removed some 9 months later. In its judgment the Court of Appeal said:

"We are prepared to accept for the sake of argument, though leaving the matter
to be decided on another occasion, that in some cases of negligence exemplary
damages may be awarded. But because negligence is an unintentional tort
those cases are likely to be rare indeed. Exemplary damages are awarded to
punish a defendant for high handed disregard of the rights of a plaintiff or for
acting in bad faith or for abusing a public position or behaving in some other
outrageous manner which infringes the rights of the defendant. Negligence
simpliciter will never suffice."

In NZ therefore it is now clear that there will be no exemplary damages for
ordinary negligence, and this decision might slow down the rising number of
claims.

Level of Awards

The negative attitude of the Court of Appeal to this upsurge in exemplary
damages claims is no doubt a result of the high amounts being claimed (by
New Zealand standards), and the perception that the amounts sought were
really being sought as extra compensation. The Court of Appeal had warned
of this development in Donselaar v Donselaar 44 :

"The Courts will have to keep a tight rein on actions, with a view to
countering any temptation , conscious or unconscious, to give exemplary
damages merely because the statutory benefits may be felt to be inadequate.
Immoderate amounts will have to be discouraged."

Until recently even in cases of intentional torts the amounts awarded were
quite low 45. However in G v G 46 Cartwright J awarded the sum of $85000
in a case of serious domestic violence. There the Judge contrasted the
amounts awarded in personal injury claims with defamation awards of
$180,000 to $400,000, and observed that there was little justification for such
a contrast between large amounts ordered for harm to a reputation and the
more modest amounts for the serious physical, emotional and sometimes
psychiatric consequences of violence.

However the increasing levels in the amounts being claimed coupled with an
actual award of $85000 in G v G , prompted the Court of Appeal in Ellison v
L 47 to say:

"we desire to make an observation about the level of damages claimed. Mrs
Ellison has sought leave to bring a claim for $250,000. Even if the conduct of
the respondent had been outrageous and deserved to be marked by an award
of exemplary damages, a claim of this size would be quite unrealistic. As far
as we are aware, Judges in this country have restricted such awards to a mere
fraction of the sum claimed here (for example, in McLaren Transport where
apparently gross negligence in the inflating of a tyre cause serious injury
$15000 was awarded). They have been right to do so. The marking out and
punishment of outrageous behaviour can be adequately achieved by a
relatively modest penalty. It is to be remembered that such awards are not
intended as compensation. Legal advisers should be careful not to be associated with claims for amounts
of damages which on any objective view are unattainable and give the
appearance of being brought in terrorem"

Thus it appears clear that the amounts sought in exemplary damages claims
particularly in negligence cases will be so limited from now on that it will
probably not be worthwhile for plaintiffs to bring the action.

Prior criminal conviction

Furthermore in another recent decision Daniels v Thompson 48, the Court of
Appeal imposed another restriction on exemplary damages claims. In that case
on the grounds of public policy, the Court of Appeal barred exemplary
damages in a number of sexual abuse claims where there had been a prior
criminal conviction on the same matter. The decision might have a major
impact and lead to the situation where victims of crime refuse to cooperate
with the authorities in a prosecution so that they preserve their right to bring
an exemplary damages claim. Although in claims for injuries arising from
motor accidents involving drunk drivers the offender is invariably prosecuted
and punished without the need for any victim to appear, there may be no
choice of prosecution or litigation by such victims, it is interesting to note that
in a case of serious domestic violenceG v G , the plaintiff decided to sue for
damages rather than to seek prosecution.

If the above restrictions were not enough, the Court of Appeal in Re Chase 49
confirmed that section 3(2) Law Reform Act 1936 excludes exemplary
damages claims from the claims that survive the death of the victim, i.e. no
exemplary damages are available where the plaintiff dies from injuries caused
by the tortfeasor before the case is heard.

The short limitation period of 2 years in which to sue is another restriction on
damages claims for personal injury in New Zealand. However the Court of
Appeal has recently developed the law in G D Searle & Co v G 50 so that the
time limitation runs only from when bodily injury is discovered or ought
reasonably to have been discovered .

Upsurge in Litigation

The two previous ACC Acts - the Accident Compensation Acts of 1972 and
1982 - had lump sums available for pain , suffering, and loss of amenities (up
to NZ$10,000 under the 1982 Act) and for disability (up to NZ$17,000 under
the 1982 Act) based on a percentage disability figure. For non-earners such as
sexual abuse victims, the lump sums were often the only significant
compensation they received. But the 1992 Act abolished these lump sums and
replaced them with what is termed an independence allowance of NZ$60 per
week for a 100% disability 51. The replacement allowance is widely perceived
as inadequate and it also fuelled the rise in litigation.

Thus the exclusion of mental trauma from the Act , the changing view of
exemplary damages for negligence, and the abolition of lump sums, all
contributed to the upsurge in litigation and brought lawyers back into the
compensation process. While the Court of Appeal may have now curtailed the
claims for exemplary damages for negligence, the claims for mental trauma
look set to escalate in an effort to obtain more compensation than that
available under the Act.

Benefits Under the Act

The benefits available under the present Act, particularly for seriously injured
earners, can still be significant. They consist of :

Vocational and Social Rehabilitation assistance including counselling, the
provision of attendant care up to 24 hours per day, home help, child care, aids
and appliances, alterations to homes and motor vehicles etc. 55

N.B. Unlike the 1982 Act there is no compensation for property damage even
for clothing or other personal items such as dentures or spectacles 61
damaged in the accident. Such matters arfe left to normal voluntary
insurance arrangements and civil actions for damages.

Funding

The question arises as to the funding for the provisions of the Act. The answer
is that the ACC is financed from 5 income sources as follows: 62

Employers (including the self employed) pay a premium based on total
payroll, depending on their type of work and their injury record. The total
brought in NZ$1232.5 million dollars in the year ending 1997.

Earners in the workforce pay a premium of 70c for every $100 earned,
collected as PAYE tax. It covers them for non work injuries apart from motor
vehicle injuries. The total brought in NZ$288 million dollars in the year ending
1997.

Motor vehicle owners and drivers pay a premium that is included in
their annual registration fee (NZ$90 for a private car) and an excise duty of 2
cents per litre on petrol sales. These two sources brought in NZ$249.4 million
dollars in the year ending 1997, i.e. NZ$192.2 million from premiums,
NZ$57.2 million from petrol sales.

Government Payment of an annual payment to cover non earners.

Investment earnings accruing from the respective account reserves.

Accounts

Injury costs are assigned to one of six accounts as follows:

.The Employers' Account is funded from employers' premiums, and it
meets the cost of all work related injuries (apart from motor vehicle
injuries) 63. It also meets the cost of non work injuries before 1992.

The Earners Account is funded from the earners' premiums, and
itmeets the costs of people in the workforce who are injured outside of the
workplace - e.g. at home or in sport. It does not include motor vehicle
injuries 64.

The Non Earners Account is funded by the Government from taxation,
and it covers the cost of injuries to persons not in the workforce.

The Motor Vehicle Account is funded from motor vehicle premiums
and a petrol levy. It meets the cost of all injuries from motor vehicles 65.

The subsequent work injury account is funded from the above 4
accounts, and it meets the costs of work related claims that involve a
recurrence of an injury received in a previous employment.

The medical misadventure account is funded from the earners and
non earners accounts, and it meets the costs of injuries that result from
medical misadventure by medical practitioners.

ACC Funds

As the current account shows, the funding of the scheme at present does not
seem to be a problem at present as it is in surplus. But employers have
constantly lobbied for changes favourable to them in premium rates and ACC
compensation, despite the fact that their ACC premiums are often lower than
the insurance premiums comparable employers pay overseas for workers
compensation and employers liability insurance. In this they have generally
been successful - hence the significant changes produced in the 1992 Act.

135,391 ongoing claims, of which 447 costing $706,000 were for mental
injury, and 4719 costing $7,775,000 were for mental/nervous shock. 68.

Conclusion

The 1992 Act was seen as "meaner and leaner" legislation in abolishing lump sums and excluding most mental trauma claims. It led to the re-entry of
lawyers into the compensation process and an upsurge in exemplary damages
and mental trauma claims. Now that lawyers have returned, they will probably
remain and look for more ways in which damages claims can be brought.
There are also indications that the Government is considering opening up the
ACC to competition, and if this were to happen, certain parts of ACC, such as
the motor vehicle scheme which has a healthy surplus and a lack of problems,
would attract enterprising insurance companies. At present New Zealand could
therefore be in the process of returning to the "fragmented and capricious"
compensation system that the Woodhouse Report found in 1960's before the
introduction of the revolutionary Accident Compensation Act of 1972.
Unfortunately, as this paper shows, successive Governments have eroded the
benefits of the pioneering Act, and it can be said that the only people who
really benefit from a return to the increased opportunities for litigation are the
lawyers and the insurance companies.

Footnote: 1
Which came into force on 1 July 1992 (hereinafter referred to as "the Act".
For the background to this Act and cases thereunder, see J Miller and D Rennie,
Brooker's Accident Compensation in New Zealand 1992 Wellington, New Zealand Vols
1and 2 .

Footnote: 2 A person injured
at work does receive compensation for the first week, whereas compensation for
non work injuris start after the first week-ss 38 and 39 of the Act

Footnote: 3 Section 4 and
8 of the Act. See text accompanying footnote 16 for the statutory definitions

Footnote: 4 Section 8 of
the Act . See text accompanying footnote 17 for the definition of cover

Footnote: 5 This does not
bar claims for compensatory damages for mental trauma - see text accompanying
footnote 12, or claims for exemplary/punitive damages - see text accompanying
footnote 37. Nor does it prevent actions being brought in Courts outside of
New Zealand. Indeed the ACC may assist with such overseas litigation -s15 of
the Act

Footnote: 6 Section 4 and
8 of the Act. See text accompanying footnote 17 for the statutory definitions

Footnote: 7 S3 defines
accident as:
a) A specific event or series of events that involves the application of a force
or resistance external to the human body and that results in physical injury
.."
This clearly covers most motor vehicle injuries.

Footnote: 8 However the
cause of the injury is of some importance in funding the scheme and in work
injury claims. See text accompanying footnote 60.

Footnote: 10 Apart from
any general compensation problems faced by all claimants. In 1997 the median
time from registration of a claim to the payment of first week compensation
was 30 days - 1997 ACC Annual Report p 54.

Footnote: 11 Examples
of some of the cases filed are:
F v Northland Health Ltd (District Court, Whangarei NP 868/93, 1993) $150,000
exemplary damages sought by an employee for exposure to chemicals at the hospital.
M v Wellington Area Health Board (High Court, Wellington, CP 205/93, Gallen
J ,
16 /12/94) $250000 exemplary damages sought against two doctors and the Hospital
over the death of the plaintiff's wife. A further $75000 is being claimed for
mental trauma.
Akavi v Taylor Preston (High Court, Wellington, CP 93/94, Master Thomson, 13/9/94
) $150,000 exemplary damages sought by employee after being scalped by machinery
at work. Settled on confidential terms.
W v Health South Canterbury (High Court, Timaru, CP 2/95,1995) $1,500,000 compensatory
damages sought for mental trauma from the switching of new born babies by a
hospital. Settled on confidential terms.
W v Counties Manukau Health Ltd (High Court, Auckland, CP 583/94, Barker J ,13/4/95)
$200,000 exemplary damages sought against the Hospital for sexual abuse of two
children by a paedophile inadequately supervised on release from a Mental Hospital.
Boe v Hammond (High Court, Wellington, M3/95, Master Thomson, 26/5/95, $250,000
compensatory damages for mental trauma and $75000 exemplary damages from the
death of a spouse in a motor vehicle accident.
B v Counties Manukau Health Ltd (High Court, Auckland, 1995) $75000 exemplary
damages sought against a doctor and the Hospital over the birth of a brain damaged
child. A further $250,000 is being claimed for mental trauma.
R v Liddell and Auckland Area Health Board (High Court, Auckland, 1995) $250,000
exemplary damages sought for sexual abuse of two children by Liddell, a social
worker employed by the Hospital.
M v Counties Manukau Health Ltd (High Court, Auckland, 1996) $75000 exemplary
damages sought against a doctor and the Hospital over the death of a baby. A
further $250000 is being claimed for mental trauma.
Innes v AG (High Court Auckland CP 152/95, Elias J, 10/7/97) a claim for damages
by the estate of Matthew Innes for his death whilst being taken to Hospital
in a police car
B v Residual Health Unit(High Court Timaru 1997).
$1 million dollars compensatory damages claimed by parents for mental trauma
and $400,000 exemplary damages for brain damage caused to an infant in hospital.
W v Health Waikato Ltd (District Court, Te Kuiti 1997, CP 98/97, 1997) $100,000
compensatory damages for mental trauma suffered by a family for the loss of
the deceased's amputated legs.
McGrory v Ansett NZ Ltd ( High Court Auckland CP228/97, Smellie J, 11/12/97)
A claim by passengers for unspecified exemplary and compensatory damages from
an air crash
Jackson v Burcher & ors (High Court Hamilton CP56/94 Master Faire, 19/9/97)
a claim for $1.5 million exemplary damages for medical negligence and alleged
cover up of radioactive damage as the result of a scan
Some of these claims have been abandoned or settled, and the rest are still
going through.

Footnote: 15 [1994] NZAR
6 The writer appeared as counsel in this case. Although it was decided in 1994
it was case under the 1982 Act. The case enabled a large group of the families
of crime victims killed by violent acts including motor vehicle crashes to gain
compensation for their mental trauma under the 1982 Act. Their cases had been
adjourned pending the test case of Cochrane.

Footnote: 16 Because
of pressure from employers groups who did not want such claims to come within
the ACC scheme as it would increase their ACC premiums. Ironically it has led
to this increase in litigation and the need for employers to take out insurance
against such claims.

Footnote: 17 The offences
listed in the First Schedule are theusual range of sex crimes - sexual violation,indecent
assault etc.

Footnote: 18 Apart from
the mental trauma suffered as a result of an act which is a sex crime
- s8(3)

Footnote: 19 The phrase
appears to be taken from the American Psychiatric Association's Diagnostic and
Statistical Manual of Mental Disorders, DSM III, 3rd edn, p6.

Footnote: 22 NZ Law Schools
suddenly had to start teaching nervous shock in Tort Law courses after neglecting
it for nearly 20 years. The legal profession also had to be warned, as they
could be sued for negligent advice if they failed to advise injured clients
of their possible damages claims - hence the Common Law Damages section in J
Miller and D Rennie, Brooker's Accident Compensation in New Zealand 1992 Wellington,
New Zealand Vol 1

Footnote: 26 The Review
and Appeal structure is contained in ss89-99 of the Act. In essence one applies
for a review of an adverse ACC decision to a Review Officer, then there is a
general appeal to the District Court exercising its Accident Compensation jurisdiction,
followed by an appeal on a question of law to the High Court,and eventually
to the Court of Appeal. In 1997 there were 3414 reviews and appeals heard, and
34.6% were decided against the ACC- 1997 ACC Annual Report p55.

Footnote: 27 In New Zealand
it is still unclear whether an assault and battery can only be committed intentionally.
In Dehn v AG [1988] 2 NZLR 564, 583, Tipping J said that a battery required
an intentional as opposed to an unintentional application of force. This point
was not considered on appeal by the Court of Appeal - [1989] 1 NZLR 320.
Although the Court of Appeal in McKenzie v AG [1992] 2 NZLR 14 said
that claims for assault and battery were barred under the Accident Compensation
legislation, this decision was under the old definition of "personal injury
by accident" in the 1982 Act. The definition in the 1992 Act with its exclusion
of mental trauma is significantly different and now allows these claims to be
made.

Footnote: 48 CA86/96,
12/2/98. The decision of the Court of Appeal was upheld by the Privy Council.
However s 396 of the new Accident Insurance Act 1998 which comes into force
on 1/7/99 will allow such exemplary damages claims again.

Footnote: 55 Sections
18-26A and over 30 different sets of regulations govern the provision of these
matters and medical treatment. See the Regulations Section in J Miller and D
Rennie, Brooker's Accident Compensation in New Zealand 1992 Wellington, New
Zealand Vol 1. The Regulations are noted for their rigidity and the lack of
discretion available to the ACC. In an effort to resolve this after many complaints
from the public and the District Court who had to deal with the hard cases,
an amending section to the Act was passed-s 26A in 1996. This gives a discretion
to the ACC to exceed the regulations in the provision of assistance for social
rehabilitation.

Footnote: 58 Ibid. $2000
is also payable to any other dependants of the deceased.

Footnote: 59 Section
58. This is payable for up to 5 years or longer if the spouse has the care of
a child under 18 or any other dependent of the deceased.

Footnote: 60 Section
59 This extends to 21 years if the child is studying.
Section 60 also provides a similar percentage of 20% for other dependants of
the deceased. No more that 100% of the deceased's compensation is payable.

Footnote: 61 s4 -Definition
of personal injury does not include these items, and there is no other section
in the Act or regulation to allow them in.

Footnote: 62 Part VII
of the Act Sections 100-134. On 1/7/99 a new Accident Insurance Act 1998 comes
into force. This Act allows private insurers to provide cover for workplace
accidents. This will change the funding of the scheme for the Employers account
but not for the others which will remain with the ACC.

Footnote: 63 The shifting
of the costs of motor vehicle injuries out of the Employers and Earners account
is really the only reason for considering whether an injury has been caused
by a vehicle.
The definition of a motor vehicle injury in s3 is
"a) Any injury occurring as a consequence of the movement of a motor vehicle
or
b) Any injury occurring as a consequence of a motor vehicle that is stationary
being struck by another motor vehicle or other means of conveyance -
but excludes an injury suffered in the course of loading, unloading, servicing,
repair, or off-road use of a motor vehicle and any use of a motor vehicle other
than as a means of conveyance. "Off-road use" does not include use
of a motor vehicle that is off road as a direct result of its being out of control
or its having been involved in an accident."
Of the 6388 new motor vehicle claims in 1997, 379 were work related, and they
cost $1,872 million. There were also 1016 ongoing work claims at a cost of $16,603
million - ACC Injury Statistics 1997 p46.

Footnote: 67 The backdated
attendant care claims which amount to NZ$216,355 million dollars over the various
accounts arose from a pro bono case (Campbell & Ors v ACC, High Court Wellington,
No AP 200/95, Heron and Ellis JJ, 4/4/96). The writer was counsel for 5 families
whose children (4) or sibling (1) had been severely injured in traffic accidents.
The injured claimants required 24 hour a day care, but the ACC had only paid
lesser amounts leaving the families (usually the female members) to cope with
the shortfall. As a result of the decision, the ACC has had to review and pay
all such claims. Hence the sum set out in the accounts.

Footnote: 68 The mental
/nervous shock claims would represent the trauma from sexual crimes. The mental
injury claims would represent the mental injuries which stem from physical injuries
to that person e.g. depression from a broken leg failing to heal.